The increase in the humanitarian intake, set presently at 13,750 people, will cost the federal budget $1.3 billion over the next four years, the Prime Minister, Julia Gillard, said yesterday.

The government is assessing the costs of establishing detention camps for 1500 people in Nauru and 600 on Manus Island, Papua New Guinea, following a visit by a reconnaissance team.

Within the next 24 hours, military teams will fly daily to Nauru to start building temporary accommodation and establishing permanent facilities with a view to having the first 500 asylum seekers there by the end of September.

A delegation of Immigration Department officials visited Nauru in January and reported to the Immigration Minister, Chris Bowen, that so dilapidated was the state of facilities there that housing 750 people – half the number the government wants to send there now – would cost $2 billion over four years.

The report warned the government that it risked rioting, similar to that on Christmas Island due to overcrowding, if it sent 1500 people to Nauru because there would be four occupants to each room.

"Crowding would lead to tension and behavioural issues in the facility very quickly," it said.

When the Herald visited the "Top Site" location yesterday, it was clear just how much work needed to be done and just how unpleasant it would be for the asylum seekers.

After recent heavy rains, the thick tropical vegetation surrounding the site – in the empty centre of the island only a few hundred metres from a rubbish tip – has already grown over some of the outlying prefab accommodation blocks that were used under the old system.

Even the structures not reclaimed by the jungle are barely salvageable and have been stripped by locals of anything of use – including lights, windows, doors and, in some cases, whole floors and roofs.

The heat and humidity at the windless site, atop a plateau near the remnants of the island's once prosperous phosphate mines, is intense. It would also be at least a half-hour walk in the scorching heat for asylum seekers to get to the populated area of Nauru or to the beach.

Mathew Batsuia is the Nauruan MP who co-chairs a government committee with his foreign minister, Dr Kieren Keke, regarding the planned asylum centre.

He also managed one of the Howard-era detention centres.

Speaking to the Herald, Mr Batsuia said the Nauruan government, while concerned about the "not ideal" tent accommodation, was ready to help.

"We want to move towards more permanent structures as soon as we can," he said.